Baker Hughes reports a sharply higher profit

Baker Hughes' profit leapsDemand for drilling work increases along with oil prices

Bloomberg News |
January 26, 2011

Baker Hughes, the oil field contractor that acquired BJ Services Co. last year, said Tuesday that its profit quadrupled as higher crude prices lifted demand for drilling work in North America.

Net income rose to $335 million, or 77 cents a share, from $84 million, or 27 cents, a year earlier, the Houston-based company said. Excluding acquisition-related costs and an investment gain, earnings were 19 cents more than the average of 31 analysts' estimates compiled by Bloomberg. Revenue surged 82 percent to $4.42 billion.

Baker Hughes shares rose $3.82, or 6.5 percent, to settle at $62.32 in New York Stock Exchange composite trading.

The quarterly results, which Bill Herbert, an analyst at Simmons & Company International, described as "best in class," were helped by its North American business, including work in the Gulf of Mexico, he said.

Sales in North America rose 69 percent to $2.2 billion, the company said.

Exploratory drilling in waters deeper than 500 feet was halted after BP's Macondo well erupted off the Louisiana coast in April, causing the worst U.S. offshore oil spill. The moratorium was lifted in October.

Given the ongoing delays in permitting new work offshore in the Gulf of Mexico, particularly in deep water, many operators are trying to breathe new life into existing fields, CEO Chad Deaton said.

The company benefited from an increased share of the growth in work-over and well-completion jobs, he said. It also received more work from producers drilling deep, high-pressure, high-temperature wells in shallow waters of the Gulf.